him on sunday. and a reminder of the top story with falling for you this, our brushing energy company gas prom has produced gas supply through the notes stream. pipeline gas flows have dropped to just 20 percent of their noble volumes. germany is called the move of power play by moscow. and coming up a documentary film, the big 4 looks at the role played by audit is in the wire cod scandal fil gail will have your next news update next hour. i've been fizzle and i'll be back tomorrow to see then it's just a thought they were gray. you know

they've been called the watchdogs of capitalism. the conscience of the free market and the pin striped mafia. the big full audit is and st and young k, p m g, p, w c. and still with the big 4 are incredibly influential in america because they are indispensable experts with an in depth knowledge of companies and tax law. they're much too powerful to me. they influence politics and legislation because we can't work without the big for they have an important

role or in corporate financial statements. it's extremely important for us consumers and for people who are in this, this to trusts the information we are given that are they doing their job in 2020 the why can't scandal shook germany from bows and from the stock market favorite to fraud company. so i never before, has there been such a plumber to la dax and sing lung audited? why can't financial results the years without uncovering the fraud is counties signed as feler. d for mistakes from 90 years ago, which led to our profession should not have repeated. see, you don't have to be an angel in order to make a good audit, you just have to be independent. each new scandal put the big order. his in the spotlight, are they taking shortcuts? are they overwhelmed?

or is the system at fault? thomas haggard is retired. his passion is building guitars. with the pension of just under 2000 years. the former high school teacher says he is enough to live comfortably. but his also managed to put a little aside. now, no wonder scared. i thought if you put money in a checking account, inflation takes it would. oh. instead he invested most of his savings in a promising german company. which did i did kind of musical florida on edge. i'm not a risk taker, which is why i didn't buy just any stock. even i bought wire card activity coughed

on it had seemed a safe bet. but then the companies suddenly crashed along with the chairs and started to computers. i printer afford so big that the stock would become almost worthless. i didn't think it was possible. is my terribly shy? why can't lost a total of 10000000000 euros in market capitalization? raising many questions these though is how could you go to the following? and i think that the payment processing company was fudging as well in senior year . younger finance ministry blames the private auditors foot. i climb under a small investor like me can't check where the wire card statements are true. austin managed thomas harris has joined a class action lawsuit against white cards,

auditor clift. they carry some blame. they should have been more careful missed. but who are thomas it in the other small investors up against ernst and young or e y became the song auditor of y cod in 2011. together with p w. c k, p m g. and deloitte e. y is one of the big for the full largest accounting firms. together they employ $1100000.00 in and around $150.00 countries and they ordered the financial statements of almost all major companies. silas styles home is doing her ph. d at copenhagen business school. she's been researching that big for and the role they play in the economy in society for years . auditing is something that is required. this is something that is extremely

important for well functioning market economy every medium or large company is required to have its annual financial results reviewed by an independent auditor. for a market economy, it's extremely important for us as consumers and for people who are invest us to trust the information we are given. and our only weapon really is the audit ah, in 1929, the start of the great depression companies and thanks around the world rush to hide their financial problems. and countless people lost their jobs and savings, including hundreds of thousands in germany when indies. and this was the context in which legislators introduced statutory audit zelma for stock companies. in 1931 is

the auth garbage in virtual twin about harden globalization accelerated the economy. companies grew quickly informed, international networks. auditors grew to in the 1980s, 80 counting fence dominated the international industry and expanded and merged forming the big c then it became the b 5. and just a short while later, the big 4 k p and g, a y, d light, and p w c. in germany, the institute of public auditors or i d. w helps influence orders in rules. the

privately ron organization represents the interests of more than a 1000 public auditing firms in germany, including the big 4. ah, close by no means says the jobs and auditor is clearly defined. ah, desk auditors are required by law to carefully verify annual financial statements proof mm. they are also supposed to maintain professional skepticism toward the companies they audit and follow a specific procedure ah, an actual spoof on east of us. an audit is designed to detect errors in financial statements of to the weather, due to fraud or not, is irrelevant. what i needed to talk interesting is for camida when

a company opens its books, it's business is light bay in numbers, order to see where money flows in and where it then flows out. bank accounts, marketing costs, operating expenses and acquisitions. the big of the company, the more complicated this flow of money can be ordered is generally cannot examine a company in its entirety. they instead choose an area to focus on the one with a suspect, the highest risk they compare the company's statements with the actual financial transactions to get an understanding of each of the transactions. if the order to find no fault in the company's annual financial statement, they give what's called an unmodified opinion, a seal of approval for the company. the

audit is verdie to wire card was trusted for many years. and to this day, e y maintains it audited, why can't to the best of its knowledge and according to protocol than by social to name mister interstate, if companies like that love and auditors don't notice it's over, because then we can no longer rely on the very foundation of the business live, namely the number is my philosophy ah, fabio demise. he co chair. germany's why cod parliamentary inquiry committee together with parliamentarians from all political parties, democracy began investigating the german companies collapse and october 2020. the committee questioned 110 witnesses of and 9 months one of the key questions did e, why make mistakes?

the why can't, scandal was not the 1st time the big old just had to face criticism for 5 years. horizontal boring machine company flow, tech inflated its results with fake sales. and k, p. m g didn't notice then either leading to damages of more than 5000000000. toich mocks, the biggest white collar crime ever in germany. with in the u. s. energy company, enron inflated its profits for years. it's ordered to arthur anderson was one of the big 5 back then. and once again at the auditor failed to detect the fraud and wrong filed for bankruptcy in 2001 and senior anderson employees destroyed company documents without permission following the scandal, the auditors surrendered its license to audit listed companies, but it never recovered and was eventually dissolved in

2008, it was investment bank, lehman brothers, filing for bankruptcy. lehman had used accounting tricks to hide its financial situation. yes. and he was kept to proving they cooked books. ah, dba markets are in shock. the stocks are plummeting. lehman brothers eventually collapsed and a massive debt in 2008, triggered the largest financial and economic crisis since the 2nd world war taxpayer money was used to save banks around the world. 59000000000 euros in germany alone escaped diesel for an certain failure from these are isolated cases of corporate fraud that auditors failed to detect or to view. and each case is one to many oust scenes. but can we say that because of these 10 scandals,

the 90 years, that's auditing tra, which checks thousands of financial statements every year. how it doesn't work was performed. we should auditors really help uncover corporate scandals on possible explanation is that there are conflicts of interest companies hire and pay their auditors themselves. a practice based on a government assumption that companies have an interest in being properly audited. then the vote trust is crucial. ist div from auditing booths. the public's trust in a company on its finances in i'm on use vote trust fund. antonini staton

with honor inca is an expert on financial statements and a consultant. she says, the fact that companies pay their auditors is problematic, or many lies shouting to is still in the chin, the sign bud loosely agree on the deadline. and i don't meet it, increasing costs and then declined. might say, i see that you stay within it or next year will hire another auditor. he makes 99, put them on swan del to is all too familiar with this pressure. he worked as a junior auditor at p w. c in luxembourg for 2 years already during the course, the garage was basically of an auditor says something feel it's against his interest to speak up, especially if they don't want to correct it deducted. it's impossible to audit well

m and ab m. and as an additional fact, a complication, the auditor company relationship next to auditing. the big 4 also offer consulting . they advise clients on digitalization, sustainability and taxes. the big 4 are incredibly influential in a market economy. they have a lot of services that really impact how business is done. sila styles, home says this creates yet another conflict of interest. you cannot see someone as a your client and then also investigate them. critically. as the regulator, you have to be on one side or the other. the big fours call business use to be order thing. but now at any accounts for around a 3rd of their revenue,

around 2 thirds comes from consultancy. then he's not really vice. if i know the auditing market is limited, and fees are essentially stagnant, and consultancy is the opposite. that then it makes sense to offer the latter in it not to 1st end date does and lies them and so beaten virtuously here, afloat. z kept valley tate endeavor. trots woocommerce graft when he mixed in, not doing well financially, insurance quality at the auditing firm. i'm in the or i'd like to add that's doing well financially. also secures financial independence, not pinging he's. i'm the only one who hasn't financially independent and is probably most likely to look the other way him for a client. they're auditing, when they shouldn't just be a neat to loiter profit

made from consulting and she was, auditors can remain independent, at least according to class. peter norman. but if this theory truths are orders is independent from the clients, choose another form a p, w. c. employee shared his experience in the us. power bought out workers in order to p, w. c for 18 years. the problem is that many companies that i experience didn't have the competency in house to document the complexity of the transactions that they were doing. but the instead of hiring 3rd party consultants to do that for them, the auditors was doing it for them. because again, once you do that, management likes you will be auditory is not supposed to do that because the auditors should audit if the other ends up doing it. then who are the,

the auditors, what have repeatedly reported his findings to his superiors. famous. i thought that was part of those things internally in my performance writing starter to gradually decline. and i was not allowed to work on jobs progressively. and this is how mar, of water says it record showed that his superior said bottle was too critical of his client's management. them to hire comp are the doors that are more friendly or that are less inclined to give negative control opinions, which man to that if we alone, what are the one that we're giving adverse control opinion? when the other 3 did not, we will not have been high. our been the market morrow bottle was fired in 2017.

his suit for reinstatement was dismissed by california court in august 2021. ah. michelle de shy is a certified public accountant and chairman of the association. the medium sized company auditing. he says the big 4 of forcing smaller auditing firms out of the market. just one of the reasons why he's been campaigning for years, restrict a separation between odyssey and consulting her values and safety unit, pinkish changer, you just can't trace what a fact consulting has on the independence of the auditors mission for, for the vacant emphasis of in proof. of arch plus mila. with following the financial crisis,

the topic was put on the e, which end in 2010, e commission and michelle. danielle also felt the independence of auditors was at risk a if you so, is it healthy for the same firms to be auditing and consulting agency? da circle fixture is complete independence even possible in that context. i'm all bushy. dominance calls are often and we hope what he said would become reality. veterans criteria benet wanted to strictly separate auditing and consultancy. he also said company should be required to change auditors every 10 years. as for the and of course, a lobby, what followed was a lobbying campaign which michelle bonnie, a correctly described as the biggest campaign ever in brussel the tub san diego was the coordinator of the

e committee on economic monetary affairs until 2021. he saw lobbyists working for large auditors exit political influence in brussels. the reading a 2015 in china slogan, they're talking to the decision makers and they're meeting them early on him and when it's crucial as of at the commission your at the ministry of the members state, often in the, in hottie anything remained michelle daniels, ideas, member states themselves got to decide which e order teen reforms. they introduced me as a specific the get. everything was watered down. justin is up to special origin. mm . gemini, introduced several exceptions. auditors could still act as consultants to companies . they audit, they could orders the company for longer than 10 years. how this reform developed

reveals another potential conflict of interest. new this we know the big for regularly getting lucrative consultants to contracts with german ministration. stand offloading e, y, and even after wire card or not, these consultancy contracts still exist will begin by a few problems. these problems show that the best people will no longer work in the ministry is ishmael, the best law to harbor this problem also applies to the oldest, a watchdog known as a pos in germany. a period checks with the order is maintain their independence. as a half, it's employees used to work at one of the big for so if you have a system where there are 4 organisation that have penetrated the government

institution that are supposed to oversee them, they are essentially untouchable. governments often have to rely on external expense and the big for a very happy to offer their expertise it keeps it in peak for when it comes to the big for there's a kind of conspiracy theory about house them. shady power influences everything, but it's but that's just part of a desperate search to find a physical power not behind. global capitalism include knocked her in global is yet, and capitalism was i but they are obviously the influential players. misty got to i was like a nomic, howard gives them political slate. ah,

for antoine dell to getting a job or the big for was a great opportunity. he started working for p. w. c in luxembourg in 2008. i did associate. i'm interested in numbers and i'm analytical and you said this was a good fit and formula he believed auditors could positively impact society. some it's year very important for auditors to be independent. sort of careless societies rely on financial data being corrected. the national sir p w. c is demanding employer with long working hours and high pressure. over time, antoine dealt who began to understand how luxembourg worked as a financial center in a demo system. so digital fits, move the moral step as good, which did the some audits really shocked me because i was investigating empty shell companies called no implies no revenue. her no real economic activity and

luxembourg, collectively taken and we're supposed to create transparency lifted up vomiting. but what's the point with empty shells? so they could either and i could live, so that was of don't want l to became disillusioned about the societal benefits of working as an auditor. a p w said he lost his motivation. after 2 years he resigned that before leaving he came across confidential tax returns. i showed that luxemburg glued international companies with deals tailor made by p w. c. that slashed corporate taxes to less than one percent. that's english gets down beside the every tax trick. just short of illegal is being used to move profit made in one countries. i'm into another country been to be taxed at a lower rate in an unknown land for soil. dragonball done not to lift destroy

herbalist only to the ghost. p w. c. even prepared, tex rollins with the letterhead of luck. some pugs tax authorities. government officials just had to sign the price waterhouse coopers. r o t. w. c, was practically a division of luxembourg. financial administration, it's unreal, wendy, on tom del to a share, the documents with a french journalist and he was then charged by locks under the saw. she's in 2014 for leaking documents, bought in 2018, he was recognized as a whistleblower. he w. c isn't the only firm selling such tax strategies. they bring in a lot of money for k p. m g, e, y, deloitte,

and other tax consultants all over the world. yeah, of course, that is some extra spy said the discussion and the big for had to kimberly, when you think about how important they are for of functioning market economy, it's little bit worried that they are also it the ones who undermine the society in some ways by showing it businesses how they can practice it takes aggressive us according to the european commission, the e, you lose is up to 70000000000 euros a year to, to corporate tax tricks. around half of the ease annual budget. the glister shot biggest damage is that people feel like some people are above the law, and those who get expert advising have an international network and don't pay their taxes. this low as the entire systems legitimacy for the schism to store this team

. the common z in a z ashley lc 2 or to one van versus more. that's a difficult area. $8.00 to $1.00 is it's morally objectionable to use tax laws put in place. but the legislator who's the sovereign ed skibo does this yet, is we're then zips gazette, st up. tax competition also causes tax avoidance, because you mean where does an incentive for some as a strategy for someone else and consultants are supposed to tell their clients about the various opportunities minister of our style. barto would have to trust with a need if the tax consultant or auditor might don't do that. here's my clients, can like to say i caused them financial damage vide because i didn't tell them all the options that we'll get all the legal options. the got to reduce their taxes. if you don't mind story, let's keep the big full aren't just advising the science. very

problematic is that many are also involved in legislation and other things in ministry looming, the pilots and ministerials every country has its own tech floors and the resulting complexity leads to a need for expertise exactly what the big for their international networks also via zene by the but i to get one to niemen consulting allows us to see where the problems and the tax systems are. one of these things. and we tell politicians, the government, the finance ministry on the parliament, parliament of mexico is conversational. it's okay to speak with experts, even business experts, but when they're practically co writing laws, ms without the public or even parliamentarians knowing that's a problem. and so somebody isn't problem. string 2021.

e, y august has come into scrutiny by the why can't parliamentary committee team of origin was appointed especially investigators. the committee asked them to review a wise wire card, ordered with their findings was summarized in the report, pulled up confidential. it was late to some journalists. ah, felix halterman's works the handle, split a gym and financial paper and had been following the wire card case for a long time. his desk also got a copy of the one back report. deb amber placed at 60 gaster. the van back report is the 1st public audits of one of the big fours work order. first with findings

are crucial forgiveness. they are all offish. but the investigators looked at records from 2016 until 2021, and tried to ascertain with an e. why should have uncovered the fraud early l mm. i cut of an in flight and 2016 wire card bought a dubious indian payments firm for a great deal of money trans, f suspicion rows, that wire card managers. i made money off the deal at home in response in my started project ring a forensic orders according to the went back report. but there were problems with the exceeding from by wire card management. i didn't sufficiently explain why they had overpaid for the take over the one that proposed into to the lesser from march 29th 2017,

written by the eager auditor and addressed to the chairperson of whack hart supervisory board to todd of andy's appointed, missed actually called stetson if these points are not conclusively clarified halford and yet there may be a modified opinion for the financial statements. we would also like to inform you that we will decide whether we can continue to work together based on your reaction to this letterhead, summer, b, y is threatening to not give an unmodified opinion of a bygone to withdraw from the auditing mandate talked would. this would have been a disaster for why a cart, a modified opinion alone is enough for investors and banks to lose trust. but it would have also been a bit like jealousy for the auditors. acknowledge her not even the week after this lecture. we don't know what happened during the time the why delivered opinion? when modified? did e y receive the information they needed?

the special investigators said the following in their report. the information includes verbal and written explanations by the management board. appropriate clarification at the open points cannot be found in the documents then you should be, don't even want to say if i'm just having the board confirm thing, then there's no point. then i may as well skip it. but i need to maintain that skeptical attitude and assume something is incorrect. skimmed this is the only time e y spotted problems at one car. in the supervisory boards notes which handles black obtained, the auditors said the following in 2019 to tat 5 under into quote, doubts about the management's integrity. life had

a way down the boards, integrity stuff, pretty much the strongest statements. and auditor can make inclusive about pref, can put in 2019 e y again, gave y a, caught an unmodified opinion, but they did refer to fraud investigations against wire cod employees and singapore, in their final report. e y said the following in written statement. very few annual financial statements of tax companies have contained such statements. this alone shows that this was an unusual measure. but the auditors comments to see little attention and why con, skilfully concealed its true value in the final report. as a family plan, if you look at the balance sheet, you see 2700000000 euros in cash and cash equivalence. nothing about how this also

includes money in escrow, get doubled with a common kind of light and from a to one on the financial statements. it looked as if why a car was swimming in money. and since young had an idea through all the years, it was auditing has armed ernst and young have failed to obtain an independent confirmation that these forms existed that desson had instead, you why relied on trustees latham in a written statement. e y said the complex criminal web was designed to deceive numerous stakeholders, including investors, bank regulators, supervisory boards, auditors, despite their diligent and extensive efforts. e y had become suspicious, but it seems they none the less continued to trust my cots management board in key moments. and so if i a y relied on board statements as while simultaneously

doubting its integrity by ford even as an external observer level. but that makes you wonder how e y could have issued audit certificates all those years onto to this day, it's unclear y e y auditors did not heed the many warning signals. the damage to the reputation is considerable. clients such as commerce bank to achieve telecom in k w, a government bank ended they aud seeing agreements with e. y in 2020 munich state, prosecutors opened investigation into the partners at e. one ordered at y a cart june 2021. the parliamentary inquiry committee presented its final reports on why i caught these up between this broad should have been stopped early on. ladies and gentlemen, again, bullying with young law. truly,

the auditors should have verified whether the 1900000000 euros one 3rd of the balance sheet was actually in a philippines escrow account. i've been on some of my m and control in the philippine leaked your e wise high earning auditors failed. because according to the committee was not the orders that to failed to fire. the case has exposed a radical failing by authority, especially by boffin might have boffin is germany's financial supervisory authority responsible for monitoring small banks, insurance companies and securities trading ah. when in 2019 fresh fraud allegations against one cod caused a steep drop in its share price, baffin band investors from betting against the company without verifying whether

they were problems with $1.00 current balance sheet. the financial regulated claim to that was outside its responsibilities. ah, if i'm not responsible for something, it's not my fault. ola, shelter the finance minister at the time and the head of baffin. he held that position from 2018 to 2021. child told the parliamentary committee. he didn't feel boffin had protected. why can't thought he conceded the state controls to prevent and detect financial fraud were in proficient and this is a service dish. busby. and that's why it's so important for us to do everything by ensuring our powers and rules are strong to prevent a repeat and doesn't continue the pursuit. ah, the german act strengthen financial market integrity or fisk was passed in june

2021. the law was supposed to help strength and confidence in the german financial market and placed more comprehensive rules on auditors. with fiscal germany implemented, the e u auditing reform proposed by michelle pioneer in 2011. the obligation to separate the auditing and consulting for major companies was taken seriously or she is now no longer allowed to audit a publicly traded company for more than 10 years. and auditors also have more liability related to audits under civil law. listed stock companies must have affected internal controls and baffin has more power and is directly responsible for monitoring balance sheets. ah, descript,

i need as a some parts of this law a useful, but when it comes to auditing, it doesn't go far enough. i would have liked a stronger separation of auditing and consulting tunnel for perform bottle. vention is skipped in fisk. i need to go to and the 1st comment has some good points though, but it won't improve the quality of audits staggered in the end. the fisk may lead to an even more concentrated, ordered market. more rules means more bureaucracy, which often goes beyond the capacities of smaller firms. sandy gold says the fisk doesn't address the actual problem. schultz at yet, and it shows introduced strict of public supervision by vin. the 1000 of on, but if the thousands of auditors have conflicts of interest that i'm intestines conflict law than just adding supervision on top is attacking from the wrong

antagonists. does viet from pipeline in elf. he club with his otens with early sign . let's be honest. non law can always prevent a wire card from happening and in fact, we way i can't definitive finan cook was an opportunist. she missed thomas haggard is disappointed. the law hasn't restored his trust vantage. sean, who is, does money in missouri year and since they say pensions are safe as we move and that everyone should fend for themselves. done the government and politicians have to make sure that order to keep an eye on things organ. does uber charge prove her? oh will please, i had fraud and before it happens in full head, he didn't talk of all she's kind what would need to happen to that to be guaranteed by would hitting i believe

that in every country the, all the thing job should be done by the governments not by private companies, private corporations as always, the for profit as it goals. and the conflicts that exist as far as independence, it will never be solved. fabio did mossey would like to see radical changes to the market system. the paulson, border team and consulting feet need to be strictly separated, isn't of once us law. we need to break up the big plays and we need to require the inclusion of mid sized auditors massage vendor shampoo fossil intell ma'am. when it comes to incorrect balance sheets in class, peter melman says the company's primarily responsible to elsie's. the supervisory board has to ensure compliance seats. if the board isn't doing its job,

authorities must intervenes from buffer needs more rights in how much public involvement you would want in any solution. and how much much market based involvement you would want in any solution. that is a political question. why a cod shows once again that audits cannot offer sufficient protection against financial fraud. markets need reliable monitoring free of conflicts of interest. so into the conflict zone with to sebastian more than a 100 days of war in the crime on the battle ver intensified my guest this week from brussels is lou both to both gun advisor to ukraine's armed forces. how long

could care, rely on western arm of emulation? who commit really trust? conflict? in 30 minutes on d, w. o. is establishing an order? she june payment president of the global power china is part of a whole system which believes his time has come. ah, any criticism of his regime, isn't it in the bud? ah, he believes his weight is far superior than that of western democracy. china's president, she ging starts july 30th on d. w. ah

ah ah ah, this is d, w is leih from ballet and russia, cuts gas supplies to germany, again, flows through moscow's biggest pipeline that dance ref 5th, but normal capacity. germany describes the move as a power play. also in the program, more wildfires both across europe ablaze crosses.